iParty Corp. (NYSE Amex: IPT - news), a party goods retailer,
today reported financial results for its third quarter of fiscal
year 2009, which ended on September 26, 2009.
Third Quarter 2009 Highlights
- Net loss of $1.4 million for the
third quarter of 2009, compared to a net loss of $1.3 million for
the third quarter of 2008.
- Consolidated net loss for the
nine month period of $2.4 million in 2009, compared to $3.0 million
for the nine month period in 2008.
- EBITDA net loss for the third
quarter of 2009 of $775 thousand compared to an EBITDA net loss in
the third quarter of 2008 of $648 thousand, an increase of $127
thousand (See accompanying schedule for reconciliation of non-GAAP
EBITDA to net income (loss) for these periods).
- EBITDA net loss for the nine
month period in 2009 of $481 thousand compared to an EBITDA net
loss of $906 thousand for the nine month period in 2008.
- Consolidated revenues of $16.4
million for the third quarter of 2009, a 7.6% decrease compared to
the third quarter of 2008.
- Comparable store sales in the
third quarter of 2009 decreased 7.7% compared to the year-ago
period.
- Payoff of $2.5 million
Highbridge Note on September 15, 2009.
Sal Perisano, iParty’s Chairman and Chief Executive Officer,
stated, “Our cost cutting initiatives, which began late last year,
continue to result in significant expense saving through the third
quarter, mitigating the overall effects of the economic recession
to date. With these cost cutting initiatives in place, we were able
to deliver bottom line results for the third quarter of 2009 that
were substantially equal to last year’s third quarter results,
despite the recession related sales shortfall during the quarter.
Also, our consolidated net loss for the first nine months of 2009
is substantially less than last year.”
Mr. Perisano further stated that “We are also pleased to report
that we were able to retire the $2.5 million Highbridge note on its
due date of September 15, 2009, with proceeds from our revolving
credit facility with Wells Fargo.”
Operating Results
For the third quarter of 2009, consolidated revenues were $16.40
million, a 7.6% decrease compared to $17.74 million for the third
quarter in 2008. Comparable store sales in the third quarter of
2009 decreased 7.7% compared to the year-ago period. Consolidated
gross profit margin was 37.3% for the third quarter of 2009
compared to a gross profit margin of 40.1% for the same period in
2008. Consolidated net loss for the third quarter of 2009 was $1.40
million, or $0.06 per basic and diluted share, compared to
consolidated net loss of $1.32 million, or $0.06 per basic and
diluted share, for the third quarter in 2008. On a non-GAAP basis,
net loss for the third quarter of 2009 before interest, taxes,
depreciation and amortization (“EBITDA”) was $775,272,
compared to EBITDA net loss of $648,173 for the third quarter in
2008. EBITDA is calculated as net income (loss), as reported under
United States generally accepted accounting principles
(“GAAP”), plus net interest expense, depreciation and
amortization and income taxes. The schedule accompanying this
release provides the reconciliation of net loss for the third
quarters of 2009 and 2008, and for the nine-month periods then
ended, under GAAP to a non-GAAP, EBITDA basis.
For the nine-month year-to-date period ending September 26,
2009, consolidated revenues were $50.54 million, a 6.4% decrease
compared to $53.99 million for the first nine months of 2008.
Consolidated revenues for the first nine months of 2009 included a
6.5% decrease in comparable store sales from the year ago period.
Consolidated gross profit margin was 38.0% for the nine-month
period, compared to 40.3% for the same period in 2008. For the
nine-month period, consolidated net loss was $2.44 million, or
$0.11 per basic and diluted share, compared to a consolidated net
loss of $3.00 million, or $0.13 per basic and diluted share for the
first nine months of 2008. On a non-GAAP basis, EBITDA net loss was
$480,985 compared to an EBITDA net loss of $906,260 for the first
nine months of 2008, an improvement of 47% or $425,153.
About iParty Corp.
Headquartered in Dedham, Massachusetts, iParty Corp. is a party
goods retailer that operates 50 iParty retail stores and licenses
the operation of an Internet site for party goods and party
planning at www.iparty.com. iParty’s aim is to make throwing a
successful event both stress-free and fun. With over 20,000 party
supplies and costumes and an online party magazine and
party-related content, iParty offers consumers a sophisticated, yet
fun and easy-to-use, resource with an extensive assortment of
products to customize any party, including birthday bashes, Easter
get-togethers, graduation parties, summer barbecues, and, of
course, Halloween. iParty aims to offer reliable, time-tested
knowledge of party-perfect trends, and superior customer service to
ensure convenient and comprehensive merchandise selections for
every occasion. Please visit our site at www.iparty.com.
Non-GAAP Financial Measures
Pursuant to the requirements of Regulation G, we have provided
below reconciliations of any non-GAAP financial measures we use in
this press release to the most directly comparable GAAP financial
measures. We believe that our presentation of EBITDA, which is a
non-GAAP financial measure, is an important supplemental measure of
operating performance to investors. The discussion below defines
this term, why we believe it is a useful measure of our
performance, and explains certain limitations on the use of
non-GAAP financial measures such as our use of EBITDA.
EBITDA
EBITDA is a commonly used measure of performance in our industry
which we believe, when considered with measures calculated in
accordance with United States generally accepted accounting
principles ("GAAP"), gives investors a more complete
understanding of operating results before the impact of investing
and financing transactions and income taxes and facilitates
comparisons between us and our competitors. EBITDA is a non-GAAP
financial measure and has been presented in this release because
our management and the audit committee of our board of directors
use this financial measure in monitoring and evaluating our ongoing
financial results and trends. Our management and audit committee
believe that this non-GAAP operating performance measure is useful
for investors because it enhances investors' ability to analyze
trends in our business and compare our financial and operating
performance to that of our peers.
Limitations on the Use of Non-GAAP Measures
The use of EBITDA has certain limitations. Our presentation of
EBITDA may be different from the presentation used by other
companies and therefore comparability may be limited. Depreciation
expense for various long-term assets, interest expense, income
taxes and other items have been and will be incurred and are not
reflected in the presentation of EBITDA. Each of these items should
also be considered in the overall evaluation of our results.
Additionally, EBITDA does not consider capital expenditures and
other investing activities and should not be considered as a
measure of our liquidity. In particular, we have opened new stores
through the expenditure of capital funded with borrowings under our
bank line of credit. Our results of operations, therefore, reflect
significant charges for depreciation, amortization and interest
expense. EBITDA, which excludes these expenses, provides helpful
information about the operating performance of our business, but
EBITDA does not purport to represent operating income or cash flow
from operating activities, as those terms are defined under GAAP,
and should not be considered as an alternative to those
measurements as an indicator of our performance.
Accordingly, EBITDA should be used in addition to and in
conjunction with results presented in accordance with GAAP and
should not be considered as an alternative to net income, operating
income, or any other operating performance measure prescribed by
GAAP, nor should these measures be relied upon to the exclusion of
GAAP financial measures. EBITDA reflects additional ways of viewing
our operations that we believe, when viewed with our GAAP results
and the reconciliations to the corresponding GAAP financial
measures, provides a more complete understanding of factors and
trends affecting our business than could be obtained absent this
disclosure. We strongly encourage investors to review our financial
information in its entirety and not to rely on a single financial
measure.
For the quarter ended For
the nine months ended RECONCILIATION OF NON-GAAP MEASURES Sept 26,
2009 Sept 27, 2008 Sept 26, 2009 Sept 27, 2008 Net income
(loss) as reported under GAAP $ (1,396,982 ) $ (1,322,630 ) $
(2,443,385 ) $ (3,003,552 ) plus, Interest expense, net
125,724 177,821 390,759 574,554 plus, Depreciation and amortization
495,986 496,636 1,571,641 1,522,738 plus, Income taxes -
- - -
EBITDA, non-GAAP $ (775,272 ) $ (648,173 ) $ (480,985 ) $ (906,260
)
Safe harbor statement under the Private Securities Litigation
Reform Act of 1995
This press release contains forward-looking statements within
the meaning of the Private Securities Litigation Reform Act of 1995
as contained in Section 27A of the Securities Act of 1933 and
Section 21E of the Securities Exchange Act of 1934. You can
identify these statements by the fact that they use words such as
"anticipate," "believe," "estimate," "expect," "intend," "project,"
"plan," "outlook," and other words and terms of similar meaning.
These statements involve a number of risks and uncertainties that
could cause actual results to differ materially from the potential
results discussed in the forward-looking statements. Among the
factors that could cause actual results and outcomes to differ
materially from those contained in such forward-looking statements
are the following: changes in consumer confidence and consumer
spending patterns, particularly those impacting the New England
region and Florida, which may result from, among other factors,
rising unemployment, access to consumer credit, mortgage
foreclosures, credit market turmoil, declines in the stock market,
general feelings and expectations about the overall economy, and
unseasonable weather; the successful implementation of our growth
and marketing strategies; our ability to access existing credit
lines or to obtain additional financing, if required, on acceptable
terms and conditions; rising commodity prices, especially oil and
gas prices; our relationships with our third party suppliers; the
failure of our inventory management system and our point of sale
system; competition from other party supply stores and stores that
merchandise and market party supplies, including big discount
retailers, dollar store chains, and temporary Halloween
merchandisers; the availability of retail store space on reasonable
lease terms; and compliance with evolving federal securities,
accounting, and stock exchange rules and regulations applicable to
publicly-traded companies listed on the NYSE Amex. For a more
detailed discussion of risks and uncertainties which could cause
actual results to differ from those contained in the
forward-looking statements, see Item 1A, "Risk Factors" of iParty's
most recently filed Annual Report on Form 10-K for the fiscal year
ended December 27, 2008 and our other periodic reports filed with
the SEC. iParty is providing this information as of this date, and
does not undertake to update the information included in this press
release, whether as a result of new information, future events or
otherwise.
iPARTY CORP. CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited) For the
three months ended For the nine months
ended Sep 26, 2009 Sep 27,
2008 Sep 26, 2009 Sep 27,
2008 Revenues $ 16,404,046 $ 17,742,315 $ 50,541,462 $
53,990,071 Operating costs: Cost of products sold and occupancy
costs 10,282,326 10,629,144 31,356,342 32,225,078 Marketing and
sales 5,810,227 6,677,703 16,231,004 18,703,915 General and
administrative
1,582,751
1,580,277 5,006,742
5,490,076 Operating income (loss)
(1,271,258 ) (1,144,809 ) (2,052,626 ) (2,428,998 ) Interest
expense, net (125,724 ) (177,821 ) (390,759 )
(574,554 ) Net income (loss) ($1,396,982 )
($1,322,630 ) ($2,443,385 ) ($3,003,552
) Income (loss) per share: Basic and diluted
$
(0.06 ) $ (0.06
) $ (0.11 )
$ (0.13 ) Weighted-average
shares outstanding: Basic and diluted
22,731,667 22,730,295
22,731,667
22,719,425 iPARTY CORP. CONSOLIDATED
BALANCE SHEETS Sep 26, 2009
(Unaudited) Dec 27, 2008
ASSETS Current assets: Cash and cash equivalents $ 64,350 $
60,250 Restricted cash 512,641 775,357 Accounts receivable
1,012,979 730,392 Inventories, net 18,377,554 13,022,142 Prepaid
expenses and other assets
445,156
279,185 Total current assets 20,412,680
14,867,326 Property and equipment, net 3,008,388 3,646,481
Intangible assets, net 1,780,862 2,303,692 Other assets
371,082 177,774
Total assets
$ 25,573,012
$ 20,995,273 LIABILITIES
AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable
and book overdrafts $ 10,838,220 $ 4,048,833 Accrued expenses
2,403,546 2,495,955 Current portion of capital lease obligations
9,228 6,444 Current notes payable 600,000 2,876,182 Borrowings
under line of credit
4,741,878
1,950,019 Total current liabilities 18,592,872
11,377,433 Long-term liabilities: Capital lease obligations,
net of current portion 16,148 - Notes payable - 600,000 Other
liabilities
1,469,377
1,200,174 Total long-term liabilities 1,485,525
1,800,174 Commitments and contingencies Convertible
preferred stock 13,663,891 13,663,891 Common stock 22,732 22,732
Additional paid-in capital 52,199,874 52,079,540 Accumulated
deficit
(60,391,882 )
(57,948,497 ) Total stockholders' equity
5,494,615 7,817,666
Total liabilities and stockholders' equity
$ 25,573,012 $
20,995,273
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